The Urban Institute’s Rolf Pendall talks about changing headship and homeownership rates and how that will affect the rental market for decades to come during the 2016 NMHC Research Forum.
The U.S. population is expected to grow by nearly a third during the next three-plus decades, fueling housing demand in the meantime that is decidedly tilted toward rentals. That was the takeaway from Rolf Pendall, director of the Urban Institute’s Metropolitan Housing and Communities Policy Center, during his presentation at the 2016 NMHC Research Forum.
While the aging of the baby boomers will swell the population ranks for those over 65 to an estimated 80 million by 2040, most of the growth will come from a young, diverse population, Pendall said. Point in case is the Urban Institute’s estimate that between 2014 and 2060, whites’ share of the population will decrease by 16 million.
This expanding and diversifying population base has dramatic implications for housing. According to Pendall, between 2010 and 2020, the U.S. is likely to see new households grow by roughly 710,000 a year for a net increase of seven million households during that time period. While both the owner-occupied and rental housing sectors will benefit from this household growth, there will be significant departures from historical norms.
On the homeownership side, for one, much of the expected net growth in homeownership going forward will come mostly from Hispanics, as well as other minority groups. But the rental side of housing is where some of the more dramatic shifts are likely to happen. In the decade between 2020 and 2030 alone, there is expected to be roughly 5.2 million new renters-and they will be increasingly multi-racial and have a greater diversity in age.
While some industry watchers see the recent uptick in renting as something relatively temporary in reaction to the housing bust of last decade, Pendall said he believes something more structural is changing when he considers that for most age groups, headship rates peaked at 1980 and homeownership rates maxed out for those under 55 in the 1980s.
“I think we’re headed to a different kind of normal than that high homeownership that we had before,” he said.
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